'The expansion of these gigantic cities has been fast, disruptive and unprecedented in world history. It has also been accompanied by rapid price increases. But they have occurred primarily in the first-tier cities. Markets cannot easily price what they have never witnessed before.'

One message is clear: The Chinese government wants to foster a national transformation from "world's factory" to "world's market."

China has been reforming itself, a process known as "crossing the river by feeling the stones." The unprecedented experience, plus the country's scale, leaves the outside world uncertain of its future.

Mr. Lamy dismissed speculation that China would invest in European debt in return for some political or trade concessions by the European side, saying it is “media fluff-fluff” and that he doesn’t believe it “for one second.”

He added: “They don’t even do that with the U.S., they buy the U.S. debt without any condition.”

A solid outcome for China’s gross domestic product in 2011 – 9.2% growth despite fears of a sharper slowdown – has panda hunters reaching for their flamethrowers. Derek Scissors of the Heritage Foundation is leading the pack, suggesting that China’s numbers cannot be trusted.

During Merkel's China visit, Chinese and German leaders will exchange views on bilateral ties and how to enhance the strategic cooperation between China and Germany, Liu said at a regular news briefing.

They will also talk about the world economic situation and Europe's economic and financial situation, said the spokesman.

BEJING - China cut its holdings of United States Treasury bonds to the lowest level in 16 month in November in a step that analysts said was meant to continue the diversification of the country's foreign exchange reserves amid global uncertainties.

China's massive foreign exchange reserves will help the world's second-largest economy shrug off external pressures and maintain a growth rate above 8 percent this year, Lin said at a press conference on the global economic outlook.

As official data show that the government's fiscal deficit is equivalent to about 25 percent of its gross domestic product, China has "lots of room" for a stimulative fiscal policy to stabilize its economy and maintain rapid growth, due to its low debt levels, Lin said.

EIJNG - Despite registering a slowdown, China's growth will play an increasingly important role in the global economy, as forecasts suggest the world is on the verge of another major downturn in 2012, according to experts.

A report by the United Nations, released on Tuesday, put the outlook for global economic growth at 2.6 percent this year and 3.2 percent for 2013, as compared with 2.8 percent seen in 2011.

The gross domestic product (GDP) of China hits 47.2 trillion yuan in 2011, 9.2 percent higher than 2010 calculating at comparable prices, according to the economic data issued by the National Bureau of Statistics of China on Tuesday.

SHANGHAI—China accelerated approvals for foreign companies to invest in its domestic capital markets in December, taking another step forward in its campaign to inject much-needed confidence into a sagging domestic stock market.

WASHINGTON - An American lobbying group predicted that the United States economy will grow by 3 percent by the end of the year and called for the US government to temper its adversarial position with China.

Inflation in China slowed slightly in December with the country’s consumer price index rising 4.1% from a year earlier, down from 4.2% in November. It was the fifth month in a row that China saw moderating inflation. Analysts weigh in:

BEIJING—More global fund managers are venturing into the nascent market for yuan bonds sold outside mainland China, a trend that market participants hope will add liquidity to a market central to Beijing's effort to expand the use of its currency.

BEIJING, Jan. 9 (Xinhua) -- China will continue to boost the development of the country's less-developed western and northeastern regions, according to a statement released after an executive meeting of the State Council Monday.

The meeting, presided over by Premier Wen Jiabao, has approved guidelines for the development program of China's west and the revitalization of the northeast old industrial bases in the country's 12th Five-Year Plan period (2011-2015), according to the statement.

The two regions have been at a new starting point in history, said the statement.

BEIJING, Jan. 11 (Xinhua) -- China and the Republic of Korea (ROK) hailed the development of ties since 2008's establishment of a bilateral strategic partnership of cooperation in a joint press communique issued here on Wednesday.

Coming amid ROK President Lee Myung-bak's visit to China, it says the two countries are pleased with achievements scored during the visit.

The two sides spoke highly of bilateral economic and trade cooperation, saying they are committed to work together to make two-way trade volume hit 300 billion U.S. dollars in 2015.

Asia, in particular the emerging economies on the continent, remains the most attractive investment destination in the world this year, according to the recently released 2012 A.T. Kearney Foreign Direct Investment Confidence Index. China, India, Brazil, the United States, Germany, and Australia take the top six positions, confirming that the world economy's center is shifting from the West to the East.

Huge FDI inflows into Asia

Xie Dongming, an economic analyst at OCBC Bank in Singapore, said Asia is undoubtedly still the most attractive investment destination, and Asian stock and bond markets are also extremely attractive to foreign investors.

The data is a positive sign that weakness in major developed economies isn't hurting Chinese exporters as much as many forecasters expected. At the same time, however, weaker-than-expected imports could be a negative sign that China's domestic demand is weakening.

The share of household consumption in China's gross domestic product has fallen from 46% in 2000 to 33% in 2010. That is far lower than the 70% level in the U.S., and below the Asian tigers when they were going through their period of rapid growth in the 1990s. It is the proof point of the argument that China's consumption is weak, with investment and ...

WASHINGTON—President Barack Obama plans to create a U.S. government task force designed to monitor China for possible trade and other commercial violations as part of a larger White House effort to get more assertive with Beijing this election year, people familiar with the matter ...

Zhou Xiaochuan, governor of the People's Bank of China, recently noted that China should not slacken its efforts to curb rising consumer prices, and should continue to properly manage inflation expectations.

Given the country's national conditions and development level, its economy is prone to overheating. Internationally speaking, Consumer Price Index growth in emerging markets is generally higher than in developed countries, so inflation must be taken seriously, said Zhou.

BEIJING - Talks on a China-Japan-Republic of Korea free trade agreement (FTA) are expected to start in the first half of this year, with May seen as the earliest date, following the conclusion in December of studies and research into its potential consequences, a source close to the matter told China Daily.

BEIJING—Lending and money supply in China both grew faster than economists' forecasts in December, data from the People's Bank of China showed Sunday, in a signal that could help ease concerns about an economic slowdown in China.

BEIJING - Urbanization, upgrading the manufacturing sector and developing strategic industries are keys to boosting the country's domestic demand, as China is at a crucial point of stabilizing growth and improving its economic structure, Vice-Premier Li Keqiang said on Friday.

At this moment, China's economy is facing challenges from both home and abroad, Li told a meeting of engineers and scientists.

With stabilizing prices and maintaining solid growth as priorities, the country should also speed up economic restructuring, as constraints from energy, resources and the environment are getting tougher, Li said.

Urbanization is an important engine for expanding domestic demand and stimulating economic and social development.

He said the government should extend basic public services to more people and encourage qualified migrant workers to settle down in cities in an orderly manner by helping them solve problems related to education, medical service and housing.

The global economy is experiencing a transformation. In order to change the current imbalanced situation, all countries need to adjust their own economic structures.

The difficult point of this economic transformation is that while the economic structure must be adjusted, economic recovery must be realized as soon as possible. It will not be an easy task to properly handle the relations between transformation and recovery.

There are also bright points in the transformation. The joint rise of the emerging economies is providing the impetus for the transformation, and East Asian economies' role in driving the global economy is strengthening remarkably.

Although the global economy is facing many difficulties, it will not stop progressing. The arduous transformation will build a new platform for the next economic take-off.

BEIJING—China's fast-growing national pension fund is considering investing in foreign private-equity funds, according to people familiar with the matter, as the world's second-largest economy continues to look for ways to broaden its overseas presence and boost returns on its vast reserves.

The National Social Security Fund, set up in 2000 with funding from China's central government, is trying to broaden its investments abroad. Currently, the pension fund—which is managed by a government entity called the National Social Security Council—can invest in foreign stocks and bonds.

With the authorization from the State Council, the National Development and Reform Commission and Ministry of Commerce recently published the “Catalogue for the Guidance of Foreign Investment Industries (Amended in 2011).” The catalogue will become effective on Jan. 30, 2012.

BEIJING - New measures will be introduced to boost consumption, especially for vehicles and electrical appliances, as export demand weakens.

With tax rebate policies on vehicles and appliances having expired or due to expire, "new measures are in the pipeline," to boost consumption, said Huang Hai, former assistant minister of commerce and member of the economic and trade policy consulting committee affiliated to the Ministry of Commerce.

"The Ministry of Commerce has drafted a proposal to continue the stimulus programs in the coming few years, but in different ways, and they are expected to cover vehicles and those related to real estate, say household appliances," Huang told China Daily in an exclusive interview.

The measures may include subsidies for consumers in affordable housing to buy appliances and for those planning to change their cars.

BEIJING, Jan. 1 (Xinhua) -- China's economy will not break. Instead, it will sustain its robust vitality and remain a beacon of hope and an engine of growth for the still fragile world economy in 2012.

Some Western analysts, including Nobel Laureate Paul Krugman, who is known not only for his economic insights but for his harsh judgement on China's economy, recently warned of a possible crash of the Chinese economy in the near future.

They claimed that slowing growth and declining stock and commodity prices were signals that the country's property bubble was set to burst.

Such warnings, however, are simply far-fetched and do not reflect the reality of China's economy.

BEIJING—China's official Purchasing Managers Index rose to 50.3 in December compared with 49.0 in November, boosted by activity ahead of holidays in China, the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics, said in a statement Sunday.

China and Japan announced a wide-ranging currency accord on Christmas day that is expected to give the yuan a more prominent role in international trade. Among the measures, the two countries agreed to promote direct yuan-yen trade, rather than converting their currencies first to dollars, and also for Japan to hold yuan in its foreign-exchange reserves

What does a more muscular yuan mean for the global economy? Here are views of three prominent economists:

China has reshuffled a list of key sectors where it wants to attract foreign investment, downgrading traditional industries like autos and putting more emphasis in emerging fields such as new energy sources.

Set in Zanzibar in 1910, it is the story of two people from different worlds falling in love. Susan immerses herself in Zanzibar. Asim falls in love with this woman from the nation that killed his wife. Susan is a spy. Asim is the chief advisor to the Sultan of Zanzibar. Germany and France are holding secret negotiations to form a Pan European alliance, which would isolate Britain and destroy her power. Susan and Asim are caught up in all this and their love is finally dashed on the cold, hard reality of international high politics.

The ancient dhow stirred in the soft morning breeze, moving through the water like a sated lion, snuffling about the other boats on the harbour; some scurrying, some at anchor, some darting before a brief gust of wind. The lateen sails a bustling panorama of blood-red and sun-bleached white.

Aft, the woman's eyes searched the skyline, drinking in the architecture of Stone Town, the heart of Zanzibar; its jagged, cluttered silhouette so familiar, so much a part of her soul.

Abruptly, her eyes ceased their restless searching, jagged by an invisible hook, transfixed by the grand buildings on the northern shore, Beit-al-Ajaib, the House of Wonders, Palace to the great Sultan of Zanzibar. The distinctive architecture captured in the tropical light: coconut white outlined by contrasting shadow plays of pepper black.

A smile, ever so slight, started to play on the edge of her mouth then disappeared. A memory that should have been fond instantly turned to sharp unbearable pain. Her eyes hardened and moved on.

Without warning the captain threw the rudder over. Stumbling, the woman barked her shin on a wooden box, a rough-hewn coffin. She recoiled, knocking over an untidy stack of cane baskets. Imprisoned in the baskets, rusty cockerels, their scruffy heads straining through the latticework, snapped at her, cried out to her; their raucous din overwhelming her, drowning her.

Dimly, through the fog of noise, the strident swearing of the sailors in Kiswahili seeped into her conscious. Understanding, she smiled mirthlessly.

The coffin had been carelessly stowed, a chore, rather than a labour of respect or love.

London 1910

“Hello, who are you? I am Oliver, is Edward at home?”

The words were spoken by a tall, impeccably dressed young man as he rushed into Edward’s flat shaking off surplus water and calling for whisky while shoving his umbrella into a stand. It was a blustery, grey, bitterly cold February afternoon in the heart of London. He brushed a curl of soft auburn hair from his forehead and smiled charmingly.

Susan laughed, her hazel eyes dancing with the exhilaration of the new. “Yes, he is having a bath. I think he is trying to get warm. I’m Susan, Susan Carey, his sister.”

“Ahhh yes, from Australia. How do you do?” said Sir Oliver, smiling broadly and offering his hand. He had noticed the laughter in her eyes, and the depth, particularly the depth, intensified by jade flecks that made them striking and alluring. “So, you have arrived, good trip I trust.”

“I am very well thank you, and yes, it was a good trip,” replied Susan.

He laughed and glanced at the sitting room, “whisky?”

“Oh, I’m sorry, please come in…….. that was silly of me, after all, it is your flat.”

Oliver smiled and gestured for Susan to lead the way. He followed her into the room, and after helping himself to a generous portion of whisky, walked over to the fire.

Shortly after, Edward, wrapped in a huge ruby-coloured dressing gown and wiping soap from his ear strode into the room. He was of similar age to Oliver, late twenties, well built, if slightly podgy, with dark auburn hair and a full moustache. Susan looked up and smiled to herself, she could see now where he had picked up some of his new mannerisms.

“Thought I could hear voices. I see you two have met, no need for introductions then.”

As he was speaking, Edward walked to the side table and grabbed a whisky decanter by the neck. He glanced at Oliver who nodded. A long finger snaked into one of the tumblers followed by the distinctive clink of crystal. He swept the decanter off the table and carried it to where Oliver was sitting. After pouring the whisky, he sank into a lounge chair and sipped from his glass, enjoying the warm glow as it spread through his body.

Suddenly he sat up exclaiming, “Sorry sis, would you like something to drink?”

“Kind of you to remember, but no thank you, and yes, Oliver has already inquired.”

Edward nodded and sank back into his lounge chair.

They chatted, tentatively at first, getting to know one another. Edward had not seen Susan for two years and was unsure how his sister would take his new relationship. Oliver was intrigued by Susan. An attractive, self-assured young lady of high intelligence with a degree was a rare find. And, as fate would have it, she was also a trained and experienced teacher. He suggested a picnic at Oxford, which was met with ready acquiescence. Arrangements were made for the following Sunday.

“I’ll see if the Rolls is available,” mused Oliver. “Must ring father, haven’t spoken to him in ages.”

Oliver, Sir Oliver Marchmaine, was an unaffected young man of intense intelligence who saw life as a great adventure to be lived to the full. He was also unyieldingly loyal to his country, England, which is why he had joined Military Intelligence on leaving Oxford.

It was 1910 and Europe was stirring. It was a time full of interest, intrigue and danger. The European chessboard was becoming increasingly complex, the moves more subtle. A time when an unexpected move or feint could have profound consequences.

Regaining her balance, the woman’s eyes were drawn, hesitantly at first, resisting back to Beit-al-Ajaib. She wondered if it was still the same. Still the same centre of power and intrigue that had been so much a part of her life all those years before; that had defined her life.

She remembered those first few moments, remembered standing in the foyer of the palace, .………… remembered the breathtakingly beautiful Persian tapestry ........

The sea breeze stirred her clothes. She smiled a little sadly, and in her mind the tapestry gently swayed. Two small apparitions ran giggling up the stairs: two small exquisitely rich burkas disappearing along the first floor landing. Childish squeals of mischief and joy left in the air.......

“Move to seaward, you accused of Allah! Move!”

Her thoughts were clawed back to the dhow, the captain crashing the tiller over to avoid another boat on the crowded harbour. The woman instinctively ducked her head to avoid the heavy boom as it swung over her, the rusty cockerels squawked their raucous indignation, their heads straining through the latticework, relentless.

The collision avoided, the dhow continued on its way. The cacophony dying down to the occasional command by the captain or the cry of a seagull.

The woman's thoughts returned to Beit-al-Ajaib

…………. laughing and giggling, girls of seven or eight. A door on the first floor slammed and all sounds of them disappeared. Silence. The woman smiled. She could see herself, a young woman, dressed plainly, unselfconsciously, her sexuality tantalisingly just out of reach, hidden beneath the thin veil of her clothing. She remembered standing alone in the foyer, looking around, perplexed. Asim came through a door to the left of the tapestry.

“Salaam.”

The woman started and looked around. Then, realising, was cold again. Alone again. Alone, rocking to and fro to the rythm of the sea. Alone, beside a rough-hewn coffin.